The Uttar Pradesh Authority for Advance Ruling ( AAR ) held that the sale of residential units of the project is not a sale of immovable property but a sale of services and GST is leviable. Once, GDA denies the Completion Certificate to the applicant, the Completion Certificate cannot be said to be deemed approved.
M/S Savfab Buildtech Private Limited, the applicant has applied for Advance Ruling under Section 97 of the CGST Act. 2017 read with Rule 104 of the CGST Rules, 201 7 and Section 97 of UPGST Act, 2017 read with Rule 104 of the UPGST Rules, 2017 in Form GST ARA-01 (the application form for Advance Ruling), discharging the fee of Rs. 5,000/-each under the CGST Act and the UPGST Act.
The applicant is an Indian company incorporated under the Companies Act, 1956 (Now repealed by the Companies Act, 2013) and is engaged in developing a group housing project in the name and style of ‘Saviour Park’ located at Mohan Nagar, Ghaziabad and has obtained GST registration in the state of Uttar Pradesh for construction and sale of the group housing project named ‘Saviour Park’.
The question is about the applicable GST rate under the provisions of the CGST Act and liability to pay GST, hence is admissible under Section 97(2)(a) of the CGST Act 2017. Further, as per the declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
The Applicant is engaged in developing the project ‘Saviour Park’ having 1150 Units in aggregate. The said project has been divided into 4 phases. The First Three Phases have already been completed and delivered to customers. Phase IV has a total of 282 units and is registered under RERA vide registration number UPRERAPRJ7191. The said phase was constructed and completed in two parts. Parts I of Phase IV having 169 units was already completed and delivered. Part Il of Phase IV having 113was under construction and has been completed in April 2023.
The construction of the 113 units in Phase IV was completed by the applicant in April 2023 and the applicant has also obtained certificates / NOC from various authorities required for the completion of the building structure i.e. Fire Safety NOC. Structure stability certificate, lift NOC, Electrical NOC.
The applicant has applied to Ghaziabad Development Authority for issuance of a completion certificate of 113 units in block Al and A2enclosing copy of the Fire Safety NOC, Structure stability certificate, lift NOC, Electrical NOC, RWH-certificate etc. The applicant has submitted that the letter received from GDA rejecting the application for a completion certificate after the expiry of the prescribed 8 working days is taken into consideration the said letter is itself in violation of the building bylaws of GDA.
An Occupation certificate (OC) is a certificate stating that the project has been built by all construction norms, building bye-laws, etc. It is only after a project receives an OC, can the builder apply for various utilities for the project. Whereas a possession certificate is issued to the buyer by the developer as proof of transfer of ownership.
While a possession certificate signifies the transfer of possession whereas, an occupancy certificate is a green signal from local authorities that the property is fit for residence. The latter provides you with the official right to occupy the property, a guarantee not offered by the possession certificate.
The AAR comprising Amit Kumar and Harilal Prajapati found that the letter of possessions cannot be substituted for the occupation certificate. Thus, having a letter of possession or sale deed does not necessarily imply that “first occupation” has taken place. The Completion Certificate was denied to the applicant by GDA.
Once, GDA denied the Completion Certificate to the applicant. Hence, a Completion Certificate cannot be said to be deemed approved. The ‘first occupation’ cannot be said to be taken either. Thus, the sale of residential units in Phase IV of the project by the applicant is not a sale of immovable property but a sale of services and thus GST is leviable.
The AAR held that the sale of residential units in Phase IV of the project by the applicant is not a sale of immovable property but a sale of services and thus GST is leviable.
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